Strategic Petroleum Reserve

Sophia was just reading an article about the Strategic Petroleum Reserve of the United States (and a proposal to double it) and while I knew how much oil was being stored I had no idea about how it was stored, very very cool (from Wikipedia):

The Strategic Petroleum Reserve (SPR) is an emergency fuel store of oil maintained by the United States Department of Energy.
The US SPR is the largest emergency supply in the world with the current capacity to hold up to 727 million barrels (1.156E+8 m3). The second largest emergency supply of oil is Japan's with a 2003 reported capacity of 579 million barrels (9.21E+7 m3).

The reserve is stored at four sites on the Gulf of Mexico, each located near a major center of petrochemical refining and processing. Each site contains a number of artificial caverns created in salt domes below the surface.
Individual caverns within a site can be up to 1000 m below the surface, average dimensions are 60 m wide and 600 m deep, and capacity ranges from 6 to 37 million barrels (1 to 4.3 million m³). Almost $4 billion was spent on the facilities. The decision to store in caverns was taken to reduce costs; the Dept. of Energy claims it is roughly 10 times cheaper to store oil below surface with the added advantages of no leaks and a constant natural churn of the oil due to a temperature gradient in the caverns. The caverns were created by drilling down and then dissolving the salt with water.

Unlimited Deposit Insurance: One Reason the Dollar is Rising?

Here's a great article on the problems with unlimited deposit insurance from Alan Blinder and Glenn Hubbard (via Greg Mankiw's 'More Commentary on the Financial Mess'). One of the interesting parts was about increasingly broad deposit insurance might be one of the reasons that the dollar is rising as savers in other countries with less favorable schemes move their money to the US to keep it secure. This would normally be expected anyway as spooked investors move their money to the more stable US but in this case financial insecurity is spreading from the US to the rest of the world but legislation like this might be one of the factors that money is still pouring into the US:

Third, an unlimited deposit guarantee in the U.S. would pull funds out of other countries, just as Ireland's guarantee led to an inflow of money into Irish bank offices in the United Kingdom. The Irish-British deposit flow happened on a small scale; but the U.S. is the 800-pound gorilla of the world market. Even amidst all this chaos, money has been flocking to our shores.

Thus we might wind up worsening an odd sort of beggar-thy-neighbor game, causing a "giant sucking sound" as deposits fled other countries for the sanctuary of the U.S. and its FDIC. The implications for our international friends could be enormous. In a misguided attempt to create financial security at home, we might inadvertently make the world a significantly more dangerous place to live.

Environmentalists Get Their Story Right

I've been writing a lot about the financial crisis because its a current issue and it's really exposing some of the underwork of the world financial system but with everyone talking about that and the upcoming US election there is less focus on long term issues. One of these is global warming/environmental destruction, and I just read a BBC article about the newly released Living Planet Report by the WWF (which uses Apture on its site) and about how they are comparing it to the current financial crisis by calling it an ecological credit crunch:

The Living Planet Report is the work of WWF, the Zoological Society of London and the Global Footprint Network.
It says that more than three quarters of the world's population lives in countries where consumption levels are outstripping environmental renewal. This makes them "ecological debtors", meaning that they are drawing - and often overdrawing - on the agricultural land, forests, seas and resources of other countries to sustain them.

He said the more than $2 trillion (£1.2 trillion) lost on stocks and shares was dwarfed by the up to $4.5 trillion worth of resources destroyed forever each year. The report's Living Planet Index, which is an attempt to measure the health of worldwide biodiversity, showed an average decline of about 30% from 1970 to 2005 in 3,309 populations of 1,235 species.

Really great and timely marketing. And also an important thing to keep in mind and to put things into perspective.

Krugman on Stockmarket Bubbles

Paul Krugman makes a great argument that the Fed shouldn't worry too much about stockmarket bubbles because their bursting doesn't cause the same excessive supply as bubbles in the real economy.

The thing to understand is that a stock market boom is not like a boom in physical investment--say, a boom in condominium construction. That kind of boom depresses future spending because it leaves behind a landscape littered with unsellable condos. But that isn't quite what happens when stocks surge: When the market value of Croesus.com doubles, that doesn't mean there will be an overhang of vacant dotcoms weighing down rental rates two years from now. It's paper gains today, paper losses tomorrow; who cares?

One thing that might potentially be an issue is indirect effects of stock markets on other parts of the economy but that's for future investigation. One other bit about the article that I found particularly interesting (and amusing) was the following mention of the dangers of excessive indebtedness:

Ah, they say, but what about debt? Shouldn't Greenspan act to counter the defaults that could accompany a market crash? If consumers go deeply into debt to buy stock or to buy consumer goods because their market gains make them feel rich, this could depress spending later on. But really bad debt overhangs come when businesses (especially real estate developers) overborrow, which is not, as far as I can tell, a big problem in America right now.

Incredible as this sounds now, it wasn't actually a lack of foresight because the article was written in early 1999 when levels of indebtedness had not yet reached the highs they did over the last 5 years.

Krugman on the Value of Reserve Currencies

A very short and interesting article by Paul Krugman on why having your currency be a Reserve Currency might not be too big of a deal:

What about our ability to borrow in dollars, to sell dollar- denominated bonds to foreigners? Hey, other countries do that too. But our debts are in our own currency! So? We still pay interest on them. True, we could inflate away our foreign debt. But we won't--and if investors thought we would, they would demand higher interest rates.

P.s. If you feel like you've been seeing a lot about Paul Krugman recently you are absolutely right: I like to learn by reading a lot by the same person at a time so I'm slowly making my way through his writings and academic work. The key thing is to know when you start seeing diminishing returns and read other things and to make sure to pick smart people.

Economic Modeling

When I first started learning about Development Economics (in Public Policy 184, Poverty and Policies in Developing Economies, which I actually eventually dropped in favor of other things) I was struck by a lecture on the Harrod-Domar model because it was very obvious to me that the model was completely insufficient and overly simplistic. I had already read The Elusive Quest for Growth by William Easterly who basically made fun of people for ever believing this model could accurately describe anything (Easterly sums it up as "GDP growth will be proportional to the share of investment spending in GDP."). 

After class I decided to ask the Professor about what the benefit of studying a model like this was since there were clearly hundreds of other factors which played a role. She explained that while this was absolutely true, it was important to try to strip away as many factors as possible and build something that one can easily reason about and see if it still makes useful predictions because it can help one get a better understanding of what is actually going on.

One should be careful to realize that there may be lots of other processes at work but that trying to understand all processes at once was not going to lead to any useful analysis. While the Harrod-Domar model is in fact far too simplistic - it's assumption of constant returns to capital make lots of sense in the short term when there is high unemployment but makes little sense once there is a balance between labor and capital - it did lead to a better understanding of some of the processes at work.

While reading a piece by Paul Krugman on High Development Theory (more on that in a future post) I was struck by this following explanation of how useful simple models can be:

Dave Fultz was a meteorological theorist at the University of Chicago, who asked the following question: what factors are essential to generating the complexity of actual weather? Is it a process that depends on the full complexity of the world -- the interaction of ocean currents and the atmosphere, the locations of mountain ranges, the alternation of the seasons, and so on -- or does the basic pattern of weather, for all its complexity, have simple roots?

He was able to show the essential simplicity of the weather's causes with a "model" that consisted of a dish-pan filled with water, placed on a slowly rotating turntable, with an electric heating element bent around the outside of the pan. Aluminum flakes were suspended in the water, so that a camera perched overhead and rotating with the pan could take pictures of the pattern of flow.

The setup was designed to reproduce two features of the global weather pattern: the temperature differential between the poles and the equator, and the Coriolis force that results from the Earth's spin. Everything else -- all the rich detail of the actual planet -- was suppressed. And yet the dish-pan exhibited an unmistakable resemblance to actual weather patterns: a steady flow near the rim evidently corresponding to the trade winds, constantly shifting eddies reminiscent of temperate-zone storm systems, even a rapidly moving ribbon of water that looked like the recently discovered jet stream.

What did one learn from the dish-pan? It was not telling an entirely true story: the Earth is not flat, air is not water, the real world has oceans and mountain ranges and for that matter two hemispheres. The unrealism of Fultz's model world was dictated by what he was able to or could be bothered to build -- in effect, by the limitations of his modeling technique. Nonetheless, the model did convey a powerful insight into why the weather system behaves the way it does.

Much has been said of late about how Krugman specializes in building highly stylized and extremely simple (and initially much criticized) models that turn out to capture everything that is necessary to prove his point:

You make a set of clearly untrue simplifications to get the system down to something you can handle; those simplifications are dictated partly by guesses about what is important, partly by the modeling techniques available. And the end result, if the model is a good one, is an improved insight into why the vastly more complex real system behaves the way it does.

In many of my later Economics classes I found that most Professors just taught the models without explaining their inherent limitations and it made everything feel fake - instead of using the models to elucidate the underlying processes they were using smoke and mirrors to make simplistic points. Lectures became intricate exercises in trying to figure out where the models broke down and started diverging from reality when the lecture itself never mentioned the fact - a useful exercise for the conscious student but very dangerous for everyone else. In conclusion, models are extremely useful in studying economic proccesses (and many other things) as long as one is aware of the limitations, or in Krugman's words:

The problem is that there is no alternative to models. We all think in simplified models, all the time. The sophisticated thing to do is not to pretend to stop, but to be self-conscious -- to be aware that your models are maps rather than reality.

The Financial Crisis Abroad

When not writing about Sarah Palin or the Presidential Election, most American news sources are focusing on the Financial Crisis the world is going through right now. Most of my readings on the topic have come from Greg Mankiw's blog via his excellent 'Commentary on the Financial Mess' posts which link to recent articles by important Economists from all over the web and has provided an incredibly rich collection of opinions and theories on what is going on in the economy.

Unfortunately, while some of these do touch upon the situation in other countries, most of them are very US centric. The Economist does a very good job of covering the situation in other countries, this week it had an interesting briefing on how the global financial crisis is impacting Eastern Europe. But the Economist has only so much space to devote to the issue each week and I have found that most of my information actually comes from the excellent Europe focused A Fistful of Euros blog. They seem to be having some issues with broken links right now (especially in their archive) but if you want detailed information about the impact of the crisis on Europe this is an excellent source. Many of their recent blog posts have been extremely detailed and informative so head over there and check it out. Here are their articles on Hungary, Kazakhstan, Spain, and the Baltic States

Simone White - The Beep Beep Song

These days I spend most of my time listening to The Economist Audio Edition or Podcasts and don't have nearly enough time to listen to music (though I still make it to concerts - I saw Stereolab at the Fillmore yesterday). Furthermore, this blog is largely focused around academic subjects, but music is still a big part of my life and as such I wanted to post the video for incredible an incredible song by Simone White here:

I heard about it through a very clever and beautiful commercial for the relatively new Audi R8 supercar (which I first saw last summer in Monterey and have seen all over the place since then). Enjoy.

Cyclically Adjusted P/E: A Reason for Optimism with a Note of Caution

I first read about Cyclically adjusted Price to Earnings Ratio in Greg Mankiw's post last week (referencing a WSJ article) and thought it was interesting but this week's Economist article on the matter made me want to post it. Here's the explanation from the Economist:

In his book, “Irrational Exuberance”, Robert Shiller calculated the cyclically adjusted price/earnings ratio over history. This measure, which takes an average of profits over the previous ten years and adjusts for inflation, is superior to the traditional p/e ratio because profits are highly volatile. In January 2000 the cyclically adjusted p/e on the S&P 500 was 44.3; the previous peak, just before the crash of 1929, was 32.6. That suggested markets had a long way to fall. And share prices did indeed suffer a long period of decline.

And here the gist of why this is a reason for long term optimism from Mankiw:

[T]he Standard & Poor's 500-stock index is priced at 15 times earnings by the Graham-Shiller measure. That is a 25% decline since Sept. 30 alone. The Graham P/E has not been this low since January 1989; the long-term average in Prof. Shiller's database, which goes back to 1881, is 16.3 times earnings. But when the stock market moves away from historical norms, it tends to overshoot. 

And a reason as to why investors should be careful about acting on this advice without careful consideration (from the Economist again):

Why does this matter? The existence of a bear market does not preclude the possibility of fantastic returns over shorter periods. Indeed, one striking point about the Dow’s 936-point gain on October 13th was that it climbed more in that one day than it did in the first 85 years of its existence (it was founded in 1896). Two of the very best years in American stockmarket history were 1933 and 1935, right in the middle of the Depression. But bear markets behave rather like Lucy in the Peanuts cartoon strip. Just when Charlie Brown is persuaded to attempt to kick the football, she snatches it away. Just when investors are persuaded the bottom of a bear market has been reached, share prices slump once more.

The Cost of Doing Nothing

After overhearing two friends talking about how the money budgeted for the bailout could be used for better things I wanted to post two excerpts from an Economist article on the British banking bailout. Leaving aside the exact details of the US plan the important point to underscore is that there are two sides to the issue of budgeting - government spending and government revenue. While the bailout is clearly a drain on the budget, so is a slowing economy, and a dramatically slowing economy would be an economic nightmare. So spending money to help avoid economic disaster is a good idea, and an approaching recession is the wrong time to bring on budgetary austerity. Next up - getting the details of the bailout as right as possible.

Government Spending:

Such a ballooning in the government’s liabilities may seem ominous, but this is to look at only one side of the public balance-sheet now that the Treasury has turned banker: on the other side stand the assets. [...] In 40 banking rescues studied by Luc Laeven, an economist at the IMF, the taxpayer typically recouped some but not all of their cost.

Set against this, the stakes are intended to be temporary, and the public purse could profit when the shares are eventually sold. Taxpayers could also make running gains from the overall package, says Ben Broadbent, an economist at Goldman Sachs, a bank. Although the Treasury will have to pay interest on the new gilts it issues to fund the recapitalisation, it will recoup over half of this from the 12% interest its preference shares in the banks will earn. It will also charge fees for the guarantees it is providing on £250 billion of new debt issued by British banks—another part of the rescue package. Putting it all together, Mr Broadbent estimates that the net gain to the exchequer—assuming it does not have to pay out on the guarantees—could be nearly £3 billion a year.

Government Revenue:

Recessions wreak havoc on the public finances by both cutting tax revenues and raising unemployment-related spending. For every percentage point that GDP is lower than expected, public borrowing will be roughly £7.5 billion higher than forecast in the first year, rising to £10 billion higher in the second year, according to the Treasury’s ready reckoner. If the economy were simply to stall in 2008-09 and 2009-10, this could double planned borrowing of £38 billion next year; if output were to contract over the period the outcome would be costlier yet.

Why I love the Economist

Well, there are many reasons, but one is wit:

In April 2007 Gazprom, an energy firm controlled by the Kremlin, made a Dr-Evil-style prediction that its market value would reach $1 trillion (ten times today’s level).

- Emerging markets and the global financial turmoil, The Economist, Oct 11th 2008

Paul Krugman on Economic Hangovers

First of all, congratulations to Paul Krugman for winning this year's Nobel Prize in Economics, I don't think anyone expected him to win this year (with most people thinking that he would win after the end of a Bush presidency so that the prize would be entirely focused on his research work, not his political opinions) but I could not be happier.

Of course everyone is writing about him and why he is important now, but what better way to write about someone's career than to dive straight into his work. Here is an excellent article from Slate on why 'The Hangover Theory' that recessions are a necessary part of the economic cycle that follow booms and must be accepted as they are makes little sense when examined more closely. Here's an excerpt, but do read the whole thing.

The hangover theory is perversely seductive—not because it offers an easy way out, but because it doesn't. It turns the wiggles on our charts into a morality play, a tale of hubris and downfall. And it offers adherents the special pleasure of dispensing painful advice with a clear conscience, secure in the belief that they are not heartless but merely practicing tough love.

Powerful as these seductions may be, they must be resisted—for the hangover theory is disastrously wrongheaded. Recessions are not necessary consequences of booms. They can and should be fought, not with austerity but with liberality—with policies that encourage people to spend more, not less.

Nor is this merely an academic argument: The hangover theory can do real harm. Liquidationist views played an important role in the spread of the Great Depression—with Austrian theorists such as Friedrich von Hayek and Joseph Schumpeter strenuously arguing, in the very depths of that depression, against any attempt to restore "sham" prosperity by expanding credit and the money supply. And these same views are doing their bit to inhibit recovery in the world's depressed economies at this very moment.

More on Understanding the Surge

I recently wrote a post about the Surge of Troops in Iraq and here is a follow up post with an excellent explanation of why the Surge was so effective that should also leave no doubt that it cannot be simply transferred to Afghanistan as is (though I have no doubt military commanders are fully aware of this). The core point is again that the additional troops helped implement a series of policies but that they were in not the central reason why the surge was successful. Here's how the Washington Post article put it (article via Tom Barnett):

How did Gen. David H. Petraeus do it? My answer? Bottom line, for the first time since the war began, a U.S. leader decided to address the political motivations of the Iraqi combatants. Petraeus convened a study group that shrewdly analyzed the raging sectarian conflict, then came up with what he called "the Anaconda strategy" to address the underlying dynamic.

I think this is crucial to understand - more than playing politics, General Petraeus took time to understand the different forces at play and why they were fighting and then developed a strategy to counteract this.

On how the insurgency was created (in addition to not having enough troops to secure the situation on the ground and control weapons stashes and the border):

[...] disbanding Saddam Hussein's Baath Party and the old regime's security services -- had helped create the Sunni insurgency. They produced a critical mass of angry men worried that the Sunnis who had run the old Iraq would wind up on the bottom in the new one.

Larry Diamond talks a lot about the problem of the overly deep debaathification where most of Iraq's soldiers, civil servants, teachers, etc. were fired in his podcast on Stanford on iTunes U. While removing top level members of the Baath party from the public sphere was clearly necessary, many others were solely party members to be able to keep their jobs under Saddam's regime.

The importance of winning over the alienated Sunnis:

On June 2, 2007, Petraeus gathered his commanders and told them to engage with influential Sunnis and insurgents and persuade them to stop fighting. "Tribal engagement and local reconciliation work!" he said. "Encourage it!"
[...]
As the Sunni insurgents switched sides, they passed vital intelligence to their U.S. partners and paymasters, which enabled Petraeus's forces to target Sunni holdouts, including diehards affiliated with al-Qaeda in Iraq. U.S. soldiers also employed new techniques to control the Iraqi population and provide for its safety and to identify fighters hidden among the civilians.

How this was achieved:

Why were so many Sunnis -- insurgents and civilians alike -- ready to respond to the U.S. overture? Because they were getting desperate and saw Petraeus's outstretched hand as their best chance of surviving a campaign of sectarian violence and ethnic cleansing led by the Shiites and fueled by neighboring Iran. The secular Sunnis' alliance with the jihadist insurgents had always been an uneasy marriage of convenience, and it broke up when Petraeus made a better offer.

On how Moqtada al-Sadr and his Mahdi Army were brought under control:

That move has been widely misinterpreted as a spontaneous, unilateral gesture; in fact, it came after months of military and political pressure. Iraqi special operations forces, backed by elite U.S. combat advisers, conducted near-nightly raids against the most extreme elements of the Mahdi Army.
[...]
That said, the intra-Shiite competition for power will persist for years; the trick is to channel it into politics, not violence -- and to continue to make use of the competition between Maliki and Sadr.

An excellent read.

Dealing with Inflation

I found this excellent article on how to deal with the rise in inflation by Frederic Mishkin several weeks ago through Greg Mankiw's blog and while the worsening financial crisis has shifted attention away from inflation worries I still think that it makes a very interesting point on how central banks should deal with the current spike in inflation:

It is certainly true that central banks should be worried about high headline inflation caused by high commodity prices. After all, households daily pay for energy and food items, and they are a big chunk of people's budgets. But central banks cannot control relative prices for food and energy. When a cold snap freezes the Florida orange crop or a tropical storm hits the gasoline refineries along the Gulf Coast, monetary policy cannot reverse the resulting spikes in prices for fresh orange juice or for gasoline at the pump that lead to high inflation in the short run. Particularly volatile items like food and energy, which are included in headline measures of inflation, are inherently noisy and often do not reflect changes in the underlying rate of inflation, the rate at which headline inflation is likely to settle and which monetary policy can affect.
...
If the monetary authorities react to headline inflation numbers, they run the risk of making serious policy mistakes.
...
Monetary policy should not overreact to headline inflation. It can do little about the first-round effects of a rise in energy prices, which include both its direct impact on the energy component of overall consumer prices, and the pass-through of higher energy costs into prices of non-energy goods and services. But the Fed does have to worry about possible second-round effects associated with changes in the underlying trend rate of inflation. Such second-round effects are likely to be quite limited only as long as the rise in the relative price of energy does not lead to a rise in long-run inflation expectations. Here there is good news as well. Inflation expectations have remained quite well grounded during this recent spike in energy and commodity prices.

Excerpts from a Speech by Robert Gates

One of my strongest convictions is that proper security (and probably foreign) policy should be driven by pragmatism, not ideology. This is one of many reasons I am very happy with Robert Gates, the current US Secretary of Defense. Here are some excerpts from a speech he gave at Oxford (via Tom Barnett).

In short, I believe the statesman would be well advised to listen, in contrast to the Roman emperors whose man in the chariot whispered “sic transit Gloria mundi” – all glory is fleeting – to listen to those who simply whisper, “Sir, we’re not sure what the hell is going on here.”

Today, we face a set of global security challenges that may be unprecedented in complexity and scope – presenting dilemmas that do not lend themselves to a simple choice between popular conceptions of Churchill and Chamberlain.

The period following the collapse of the Soviet Union and the end of the Cold War unleashed old ethnic, religious, and nationalist hatreds and rivalries that had been largely buried since the Great War: The ethnic and religious slaughter in the Balkans; Russia’s seeming return to Czarist habits and aspirations; the fault lines between Sunni and Shia in Iraq and across the Middle East. The cast of characters sounds disturbingly familiar even at a century’s remove.

And after talking about more threats and problems:

Still, even given the jaded disposition of an old spy, there are ample grounds for optimism. First and foremost is the extraordinary growth of political and economic freedom around the world since I last served in government 15 years ago.

But to secure these remarkable gains, and protect our most vital interests and aspirations in this global environment, the next American administration, working with our allies and partners, will need to employ a pragmatic blend of resolve and restraint to deal with the threats that confront us.

The Surge

With the ongoing election there has been a lot of talk about the Surge in Iraq, mostly in the "They didn't think the surge would work, bastards!" kind of way. I think that few people would look at Iraq today compared to Iraq 3 years ago and say that things have not improved. I think that very few people out there understand why and I think that understanding the reasons why the surge was successful is going to be extremely important in planning future military action. This has been something I have been interested in for a while and I'll try to start writing more about this on this blog without veering into politics (which I like to avoid here).

I remember listening to experts around the time the idea of the surge first started circulating who mostly thought that it wouldn't work due to a lack in sufficient number of new troops. If you compare the pre-surge numbers to the post-surge numbers (which I have to admit I don't know exactly) you will see that the percentage difference is really not that great, mostly because more troops were simply not available. I think that everyone at the time already agreed that the proper way to go into Iraq (ignoring the question of whether that was a good idea) would have been with a number of troops comparable to what we had then to make sure that non of the instability started in the first place. AT the time of the surge it seemed difficult to fathom how a small increase in troops would be able to stop the insurgency that was then in full force.

I think this relatively small increase is crucial to understanding the actual process: most people think the surge simply meant 'more troops' and everything else happened magically. From my current understanding it was quite the opposite: a serious of new approaches that required more people to work but also meant changing the behavior of the troops that were already on the ground. David Petraeus' counter insurgency manual gave the first indication of how one should deal with the problem and Tom Barnett points out two key reasons for its success:

The surge works for two key reasons, both of which couldn’t have been exploited to the point of solidification without additional bodies: 1) all Iraqis were tired of conflict and were looking for a way out: 2) the “awakening” due to al Qaeda’s over-reach. Fair enough.

Barnett then goes on to point out the lack of a 'diplomatic surge' on the political side to further help slow the insurgency and help American lives that I think points to a larger issue with US security policy:

I agreed with the logic of more troops (my SysAdmin-bias allowed me no other opinion). My problem with the surge was the lack of the diplomatic counterpart, now bequeathed to the next president, because I felt the lack of one meant—again—too many American lives needlessly lost and whatever gains we achieved logically held hostage to their neighbors and their willingness to wait us out and start trouble once we inevitably had to draw down, possibly making this whole success a complete illusion and thus wasting more American lives to no good end (not to mention those we waste in the future). 

The United States is fortunate to have an extremely capable military (with many brilliant leaders) that when faced with a new challenge/threat in the field is able to adapt to it and overcome it. David Petraeus deserves all the praise possible for fixing the military's approach to Iraq, like many in the military he has done an exceptional job of taking a difficult situation and improving it. I think that US military commanders are generally very pragmatic once they are on their ground and troops lives are at stakes: they want to protect their soldiers and make their mission a success instead of worrying about particular ideological approaches. The real problem is what assignments and situations the military is given by its civilian leaders.

Barnett on Big Wars

I've been reading Tom Barnett's blog since seeing his talk at PopTech last year. He is a military geostrategist and his blog links to a large variety of excellent articles from the New York Times, Washington Post, Financial Times, Wall Street Journal, etc. with brief commentary and is currently one of my main ways of discovering interesting articles. Barnett is a big believer in the US military's need to transform itself to be better adapted towards small wars and 'sysadmin work' instead of the current (changing) focus on large wars with other global powers (e.g. Russia and China). I find the following comment to a McClatchy article on the need for big war capabilities the best explanation for why the US doesn't need to worry too much about the big war capabilities of ground forces:

Here is the missing piece to this argument: America can impose its big-war willpower nicely with air power and air power alone. If we're not going to own the aftermath, then we can just bomb, bomb, bomb and not care about what comes next. I can do that with air assets from Navy and Air Force. If I'm not going to put my ground forces at risk in small wars, why the hell would I put them at maximal risk in big ones?
[...]
If we are going to fight high-end, then it'll be missiles and drones and high-altitude bombers and guided this and that. It will not be the Marines storming some beach en masse, nor Normandy with the Army. In short, we can have our SysAdmin green force and use it too, while maintaining an appropriate lead in the blue Leviathan force.